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Business Environment | Schroders Plc. | PESTLE framework

Question :

This assessment will cover certain questions:

  • What are the macro environmental factors in organisation.
  • Evaluate the effective understanding of business and their appropriate functions.
Answer :

INTRODUCTION

Business environment can be defined as the sum total of all the factors such as internal and external factors that influences the functions of company including customers, employees, supply and demand, business regulations, management etc (Prajogo, 2016). In the current times, it is highly essential for the managers to make proper assessment of both internal and external business environment while developing strategic & policy framework. The Report is based on Schroders Plc. It belongs to the industry of investment and management. It was founded in year 1804. Key people of the firm are Peter Harrison, Michael Dobson etc. The Report will outline the history, organization structure and governance of the company, the value of using PESTLE analysis and analysis of macro environment with the help of PESTLE framework.

TASK 1

Examine the governance and structure of the company.

Overview of organization-

Schroders Plc is a type of asset management company. It operates the activities in the industry of investment management. Company was founded in year 1804. Headquarter of the firm is located in London, United Kingdom. Currently, there are more than 5000 people working across different ranches worldwide. It provides services at approximately 32 different locations such as America, Africa, Asia and Europe etc. In year 2018, total revenue of the company was £2626 million. Total operating income in year 2018 was £761 million. The website of Schroders Plc. is www.schroders.com. The main headquarter of the firm is located in the City of London. The securities of the company is traded on London Stock Exchange and it is also a component of the FTSE 100 Index.

History -

The history of the company was started in year 1804 when John Henry enter into partnership with John Frederick. In year 1818, both the partners has established Henry Schroder & Co. in London.

In year 1923, J Henry Schroders Banking Corporation which is a commercial bank was established in New York. Further, in year 1959 shares of Henry Schroders & Co. was issued to the public for the first time (Belás and et.al, 2015). In year 1986, firm has disposed its commercial banking branch which is located in New York and then purchased 50 % of Wertheim & Co which is an investment bank based in New York. The activities of the bank are very similar to the business in London. In year 2000, firm has disposed its investment banking branch to Citigroup for £1.3 billion. In year 2005, company has entered into joint venture with Bank of Communications Co. Ltd. for establishing fund management company in China. Further, in year 2007 firm has entered into an agreement with Fisch Asset Management which is the leader in strategies of investing in convertible bonds to distribute different types of convertible bond funds. It has also expanded the business in Middle East by starting a new office in Dubai.

Later, in year 2011 company has established an office in Chile. In year 2012, company has purchased 25 % share capital of Axis Asset Management Company which is based in India and it is a part of Axis Bank Limited. In year 2013, Schroders Plc. Has purchased capital management branch of Cazenove for worth £424 million.

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Organizational structure -

It refers to the system that defines how specific activities are performed in order to attain the objectives of organization. The activities may involve responsibilities, rules and roles etc. It also determines the flow of information between different levels in the company (Erasmus, Strydom and Rudansky-Kloppers, eds., 2016). The organizational structure of Schroders Plc. is as follows -

Hierarchical organization structure -

Under this type of organization structure there is a proper chain of command from top authority to low level of the business. Senior management of the company is having authority to take all the decisions then those decisions are passed downwards through subsidiary levels of the management. If, any person at lower level wants to take any decision, they will make request to upper level management for the approval. There are various benefits of hierarchical structure to Schroders Plc. Such as it helps to permit only few people to take decisions due to which it results into control orientation (Roberts, 2016). Further, there is a career path through this type of structure where employees get advance through different levels of management over a number of years. Those people who reach at the position of top management develops massive experience with the business.

Governance -

Chairman- It refers to the person appointed by board of directors who is having responsibility for presiding over committee meetings.

Michael Dobson:

The chairman of the firm was appointed in April 2016. Michael is also being Chief Executive since November 2001. 

Board of directors:

They are people who are elected by shareholders of the company to represent the interest of shareholder's, and they also ensure that the management of organization will act on their behalf.

Executive Directors- They are a senior manager of the firm who is responsible for working with board of directors.

Peter Harrison:

Peter is appointed as a Chief Executive of the group in year 2016. Previously they are head of investment and executive director from May 2014. Further, Peter is also a Director of FCLT Global, Chairman of the Investment Association and a member of the Takeover Panel.

Richard Keer

Richard is appointed as a Chief Financial Officer and a Director of the company in May 2013. Further, they are also appointed as a Chairman of Audit Committee and non-executive member of Lloyd's Franchise Board.

Non-Executive Directors- They are the members of the board of company who is not a part of team of executive directors.

Ian King:

Ian is nominated as a non - executive Director of the firm in January 2017 and as a Senior Independent Director in April 2018. Further, Ian is also Chairman designate of Senior plc.

Rhian Davies:

Rhian is appointed as an Independent non-executive Director in July 2015. They are a partner at Electra Partners as an independent fund manager until June 2015. Further, Rhian is also Chairman of Audit and Risk Committee.

TASK 2

Importance of conducting PESTLE analysis for the firm.

PESTLE analysis-

It refers to the tool that helps business to identify forces that are existing in macro environment that influences the working of organization. It includes factors like Political, Social, Economical, Environmental, Technological and Legal, PESTLE analysis is very important for Schroders Plc in different ways (Reddy, 2018).

Collecting information is the initial stage of PESTLE analysis. After gathering details, the next step is to evaluate them. The analysis of information related with external factors helps team members to identify the threats and opportunities and also support the management to gain advantage of those opportunities. Further, the analysis also help the company to counteract the threats. A PESTLE analysis is not only about listing down technological, political, social and economic fators but, such type of information is very helpful in developing effective strategies (Yanase and Limpaphayom, 2017). After collecting details for relevant factors the analysis is helpful in comparing the factors with other factors. This makes easier to generate solutions for overcoming threats and also help to generate ways to make the best use of available opportunities in order to support the firm to achieve its goals.

A PESTLE analysis is very important element of the process of strategic planning. Without basic idea about macro factors that are influencing the business or its strategies, management will never be able to attain the aim and objectives or to accomplish the goals. On the other hand, the total insight that will gain from PEST analysis will ensure that the strategies developed will be successful (Ngoc-Dung, 2017).

Further, PESTLE analysis also help to develop deep understanding of the factors that are directly or indirectly affecting the organization. PESTLE tool helps business to look at different influential factors that might affect the success of product or services of the business (Aithal, 2016). It also promotes the development of strategic thinking for gaining a deeper understanding of strategic planning. Schroders Plc. Conduct PESTLE analysis due to various reasons such as it provides a simple structure to perform the analysis. It also helps to bring together the skills of different departments to achieve a common objective. It assists company to evaluate potential threats to the business and the ways to reduce their negative impact. Moreover, it helps Schroders Plc. to encourage workers to choose a strategic thinking mindset, assist the management in developing a method to exploit and find out new opportunities and also helps to determine the effect of different types of decisions before implementation (Perera, 2017). PESTLE analysis is a very important tool that helps manager of the company to evaluate positive and negative effect of major business decisions. This can be applied to small projects like marketing campaign, large projects, new methods of production and launching new products etc.

TASK 3

Analysis of external environment with the help of PESTLE framework

In order to analyze macro environmental position, PESTLE tool has been used and applied. This is highly effectual which in turn provides high level of assistance in evaluating external market position from several perspectives such as political, economic, social, legal, technological and environmental. By making assessment of all such aspects Schroders Plc would become able to develop competent strategic and policy framework for the upcoming time period.

PESTLE analysis

  • Political factors: It lays emphasis on determining factors which in turn places high impact on company’s profitability. Schroders Plc is operating in several countries which in turn impose several political risks in front of the company. Tax policies prevailed in the country and trade barriers closely influence business practices of Schroders Plc.
  • Economic factors: With regards to Schroders Plc, manager should keep in mind economic aspects while setting strategies. Moreover, firm is offering its products or services over the globe. Meanwhile, economic condition of concerned countries has significant impact on business operation. The reason behind this, during recession, customers prefers less in relation to making investment due to lack of having high disposable income. Firm’s profitability is also influences negatively due to the fluctuations take place in exchange rates. For dealing with this aspect, currently firm is applying hedging strategy or tool. This in turn helps firm in reducing the negative impact of changes in exchange rates. Along with this, conditions of employment also have impact on Schroders Plc’s operations. Moreover, in the case of lower employment customers do not invest money in products offered by asset management companies. Thus, while setting strategic framework business unit should keep in mind all such aspects.
  • Social factors: Under this element, there are several factors which impacts Schroders Plc’s operations significantly. Due to the class distribution factor Schroders Plc failed to promote premium category products to the customers. Moreover, after the condition of global recession spending power of the customers decreased significantly. Hence, for getting success firm has to rely upon niche marketing (Pestle analysis of Schroders Plc, 2019). Further, now customers take decision about purchase after making evaluation of all the options available in market for investment purpose. The rationale behind this, now all the companies share their investment or assessment management products or services online. This in turn offers opportunity to the customers in relation to taking appropriate decision after evaluating each and every aspect such as cost, return etc. Along with this, now trend pertaining to online shopping has also increased significantly. Thus, by offering quality online services Schroders Plc would become able to develop satisfaction among the customers.
  • Technological factors: In the current times, technological advancement is increasing with very high pace in every industry. With the motive to boost profitability and enhance operational efficiency aspect companies are placing high level of focus on using updated technologies. In the context of Schroders Plc, firm should lay emphasis on undertaking social media marketing strategy. According to this, by placing advertisements on social sites such as Facebook, Twitter and Instagram firm can persuade customers about services offered by it. Moreover, now people are spending their high level of time on social networking sites (Schroders Plc PESTEL & Environment Analysis, 2019). Hence, by placing innovatively designed advertisements company can influence decision making of customers at global level.
  • Legal factors: Schroders Plc also has accountability in relation to complying with legal aspects, laws and legislation. As, company is operating at global level so it needs to follow all the concerned rules and regulations. There are several laws related to intellectual property right, consumer, employee, environmental protection etc with which company needs to comply for developing effectual image at marketplace. By considering all such aspects it can be depicted that Schroders Plc must follow laws in relation to employee/labour health & safety as well as ethical obligations. Further, according to the laws, Schroders Plc cannot discriminate its individual on the basis of age, race, gender etc. Along with this, firm also needs to follow Data Protection Act and Intellectual Property right Act for avoiding undesirable aspects in business operations. 
  • Environmental factors: For attaining success in the competitive business environment Schroders Plc is required to comply with environmental aspects. Now, customers give high priority to the firms which perform their operations in an eco-friendly manner. Hence, Schroders Plc is required to employ renewable technologies which in turn ensure recycling and effective waste management. Along with this, firm also needs to make focus on complying with environmental rules and regulations for avoiding aspects pertaining to resource depletion (Schroders Plc PESTEL & Environment Analysis, 2019). In addition to this, by following all the environmental rules & regulations business can develop distinct image in the mind of customers and thereby enhances brand image. Further, weather and climatic conditions also have significant impact on Schroders Plc. Moreover, highly extreme weather condition compels organization in relation to making value chain flexible and imposes high cost of operations. Referring overall evaluation, it can be presented that changes which take place in weather and climatic conditions closely influences spending pattern of customers etc. Due to all such aspects, firm is required to make significant changes in both product and marketing related strategic as well as policy framework.

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CONCLUSION

By summing up this report, it can be concluded that Schroders Plc follows hierarchical structure. It can be seen in the report, managers of each allocated with distinct roles and responsibility. Further, it has been articulated that Pestle is highly significant for Schroders Plc from the perspective of decision making. Moreover, such tool provides high level of assistance to the firm in assessing the extent to external business environment is favourable. Besides this, it can be inferred that by doing PESTLE analysis firm can identify measures or initiatives which it should takes for building as well as sustaining competitive position over rivals. It can be summarized from the evaluation that by making focus on technological, legal and environmental aspects firm can attain success.

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